There are various solutions that a person can use when dealing with their debts. If you are living overseas with debts in England and you want to sort these issues out, it can be quite confusing to know the best way forwards. Do you declare bankruptcy or try to organise an IVA? Is debt management a good solution or should you try a full and final settlement?
As a Company we always consider all options that are available to a client, and these are explained to you in plain English. If we feel that bankruptcy is not your best solution we will tell you so. Below we give you a guide to the options that are currently available. If you have UK property that is in negative equity, please see our separate property page for further information.
Debts up to £5,000
If you owe less than £5,000, bankruptcy could be an expensive way to deal with this amount of debt. The current bankruptcy Court fee is £700 per person and due to the complexity of the paperwork that is required for the High Court, most people will instruct a bankruptcy company to prepare and represent them. With fees between £500 and £1000 (in addition to your High Court fee) you will need around a third of the amount that you owe to file the bankruptcy from overseas and this may not be that cost effective.
You may be better to look at either a full and final settlement or a good debt management program.
Bear in mind that in bankruptcy you will be interviewed, your disposable income will be reviewed and if the Official Receiver considers that you have disposable income you will be asked to pay this to your creditors for a period of three years. This is an income payment agreement and together with your initial fees you could even end up paying back more then you originally owed.
Debt management will pay this amount off gradually with your creditors being quite happy as they receive a steady payment.
With a full and final settlement you may be able to settle the debt with a one off payment-maybe of around 50% of the amount owed.
Between £5,000 and £10,000
When you owe between £5,000 and £15,000 you can consider different solutions such as bankruptcy, settlements or a good repayment plan.
Bankruptcy can start to become a good solution, but again this can depend on your personal circumstances. Disposable income and assets need to be considered, as in bankruptcy these are key areas that the Official Receiver will look at for the benefit of the creditors. If you have no property, assets or disposable income, bankruptcy may be your best way forward.
If you have disposable income or savings, a debt management plan or a full and final settlement may be more suitable. In these types of situations you need to take advice from an experienced insolvency advisor in order to weigh up your options.
In most situations the best option can be dictated by your particular circumstances and these need to be taken into account when looking at your solution. Beware of companies that try to pressure you into a solution-you should be given the facts which then allow you to make an informed decision.
We pride ourselves on not trying to “push” people into filing bankruptcy from abroad, so speak to one of our advisors for a free consultation now!
Debts over £10,000 or £15,000
Once your level of debts start to reach the above amounts you naturally move into bankruptcy or IVA territory.
This is because debt management programs could take many years to finish if you had, for example, £15,000 of debt. If you paid £100 per month a standard debt management program could take you fifteen years to complete, and as it is an informal agreement interest or additional charges may be added to the amount that you are trying to clear.
An IVA is a set repayment plan that normally runs over 5 years. The amount that you owe is reduced and the interest and charges are all held. As this is a formal agreement there would be no extra charges applied however, you would be reviewed annually to see if you are able to increase your monthly payment.
Bankruptcy only lasts for 12 months and clears the full amount of debt. Bearing this in mind, the fees become cost effective when you are considering debt amounts over £10,000.
Full and final settlements are still possible to offer your creditors but as you may need around 50-60% of the amount you owe the higher the debt level the higher the lump sum you will need.
Take specialist advice from one of our experienced advisors.